Top Analyst Bullish Down the Line on Advanced Micro Devices, Inc. (AMD) and NVIDIA Corporation (NVDA)


Top analyst Matt Ramsay at Canaccord continues to see an advantageous gamble when betting on chip giants Advanced Micro Devices, Inc. (NASDAQ:AMD) and NVIDIA Corporation (NASDAQ:NVDA). While AMD still poses questions as it seeks to bring its road map into reality amid fierce competition and though NVDA may risk share weakness in the short-term on gaming, resulting in a price target cut, the analyst nonetheless is in it for the long-term investment for these two players. Let’s dive in:

Matt Ramsay has a very good TipRanks score with a 68% success rate and a high ranking of #52 out of 4,557 analysts. Ramsay garners 21.8% in his annual returns. When recommending AMD, Ramsay yields 84.0% in average profits on the stock. When suggesting NVDA, Ramsay realizes 125.0%.

Advanced Micro Devices Risk/Reward Tilted Toward Upside

On the heels of AMD’s Ryzen 7 desktop CPUs launch coupled with discussions with CEO Lisa Su, Ramsay chimes in with great confidence on the chip giant- particularly as AMD gears up for its next launch of Ryzen 5/3 CPUs. Therefore, the analyst reiterates a Buy rating on shares of AMD with a $17 price target, which represents a 23% increase from where the stock is currently trading.

Ramsay underscores, “[…] despite the recent stock appreciation and volatility, [we] continue to gain confidence in 1) AMD re-emerging as a competitive second source to Intel (with leadership in several subsegments) with an on-track Zen road map across relevant x86 CPU markets including enterprise/gaming desktops, media-focused notebooks and certain server market segments, 2) gradual GPU unit share recovery in low market tiers with Polaris should be supplemented by the Vega launch in higher-value tiers, and 3) AMD now being focused to deliver a multi-generational road map with the customer backing and foundry partners to sustainably do so. Modest growth assumptions across a $50B+ TAM from very low CPU/GPU share levels today drive our estimates materially above consensus, as much skepticism still remains.”

Overall, “While we recognize road map execution and competitive risks remain, we believe risk/reward is still tilted toward the upside and that our long-term bullish target of $1.00+ in EPS remains attainable by 2020,” Ramsay concludes, anticipating fundamentals can make quite the comeback amid product launch momentum approaching the giant’s Analyst Day next month.

TipRanks analytics demonstrate AMD as a Buy. Out of 19 analysts polled by TipRanks in the last 3 months, 9 are bullish on AMD stock, 9 remain sidelined, and 1 is bearish on the stock. With a loss potential of 19%, the stock’s consensus target price stands at $11.75.

NVIDIA Pullbacks Translate to Buying Opportunities

Long-term, Ramsay is still fully in NVIDIA’s court, backing the chip giant’s striking picture of growth. Yet, short-term pitches a slightly different tale in terms of gaming GPU weakness, leading the analyst reiterates a Buy rating on NVDA while reigning in the price target from $130 to $125, which represents a 23% increase from where the shares last closed.

“[…] we anticipate our positive thesis on NVIDIA will continue to play out with strong gaming GPU growth and new trends including deep learning, virtual/augmented reality, and autonomous driving catalyzing new market growth. However, after almost staggering financial and stock out-performance during C2016, we believe overall revenue and EPS growth and NVIDIA stock performance may plateau near term before re-accelerating in C2018 as we anticipate slower Y/Y gaming GPU growth with tough Y/Y compares and the introduction of new competitive Vega GPU platforms from AMD, a period of increased investment in the business and the one-time impact of the ending Intel royalty payment will all be felt this year.”

“As such, while we believe NVIDIA represents a compelling growth story exposed to several secularly attractive markets and we continue to recommend shares as an overweight holding for long-term investors, we are lowering near-term gaming GPU growth […]” surmises Ramsay, who advises investors to be savvy and buy on share weakness.

TipRanks analytics show NVDA as a Buy. Based on 25 analysts polled by TipRanks in the last 3 months, 13 rate a Buy on NVDA stock, 7 maintain a Hold, while 5 issue a Sell. The 12-month average price target stands at $115.95, marking a 14% upside from where the stock is currently trading.

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